Of Stumbles and Pitfalls: Laureate Education Inc.

Laureate Education Incorporated is a company that, together with its subsidiaries, provides services for higher education as well as various higher education programs to students through their universities or other institutions of higher learning. The company was started in 1998 under the name Sylvan Learning Systems. However, in May 2004, the company changed its name to Laureate Education. Its headquarters are located in Baltimore, Maryland. The company offers its services through four distinct segments. First is LatAm, which consists of campus-based institutions that give undergraduate and graduate degree programs. Europe and AMEA follow. They offer more professionally-inclined undergraduate and graduate degree programs. Finally is the GPS segment which offers more degree programs within the fields of culinary arts, art, and hospitality.

This firm states that it is the largest in the higher education sector. It has more than 1 million enrolled students and spans 71 universities.

In its S-1/A form, the company planned to sell 29 million shares each falling within the price range of $17 – $20. As such, the firm planned to raise over $500 million in its offering. On February 1st this year, the company had its initial offering. Unfortunately, however, it only managed to raise $490 million, $10 million under its estimated target. This was as a result of the company selling its shares $3 shy of its price range at $14. Additionally, the company put up 35 million shares at this reduced price.

Joint book-running managers for the release were Credit Suisse, Morgan Stanley, Barclays, Macquarie Capital, J.P. Morgan, BMO Capital Markets, Citigroup and Goldman Sachs & Co. The company’s co-managers for the release included Baird, Barrington Research, Piper Jaffray, Stifel, William Blair, Bradesco BBI and BTG Pactual. The firm had an additional 4.35 million shares as an over-allotment option for its underwriters.

Laureate Education began trading in the markets on the next day, where beyond the disappointment of its release, the company’s stock price continued to slump. The company debuted on the market under the ticker LAUR. Its stock opened at $12.50 and traded through the day around the range of $12.12 to $13.32. The company closed the day’s trading at a dismal 5.4 percent below the offering price.

Currently, operating a for-profit organization for higher education within the United States has proved to be a daunting task. Despite the company’s steady growth of 13 percent in 2014 to 2015, it made consistent losses over nine months in 2016. Additionally, companies such as these rely heavily on government subsidies so that they can offer their services at more affordable prices to students. Further, strict US regulations on higher education services cause many investigations to crop up which could affect the company’s stock if the reports offer bad publicity.

As of March 14th, the company’s shares were down by $1.20 which translated to a loss in share value of 8.57 percent. Since its offering, the firm’s stock has been on a generally downward trend. The future is still bleak for Laureate Education. Perhaps things could change over time.